New research from International Pensions at Allianz Asset Management shows that cities in developed countries are not the fertility traps once thought. Head of International Pensions Brigitte Miksa explains why this is just a myth from the past.

Allianz SE
Munich, May 09, 2016

Brigitte Miksa, Head of International Pensions

Allianz.com: Demographers have long seen cities as “fertility traps”. Countries tend to urbanize as they develop and become wealthier and, as they urbanize, fertility plummets. However, new research from International Pensions shows cities are not the fertility traps once thought – at least not in the developed world.

Brigitte Miksa: That’s right. We looked at 41 major cities in Europe and the United States with a population of over a million, ranging from New York City to the capital of Malta, Valletta. What we found – and contrary to popular belief – is that, on average, cities have a seven percent higher average fertility rate than the countries in which they are located. This pattern transcends borders: Lisbon has a 50 percent higher birth rate than Portugal; Bratislava, 31 percent more than Slovakia; and Birmingham, 17 percent more than the UK. Surprising numbers also emerged from US cities. In Dallas, the adjusted birth rate was 17 percent more compared with the national average and New York was five percent higher.

Were your surprised by these findings?

Yes. But what was more surprising is where this is happening. It is often assumed that cities dampen fertility because the cost of raising children is higher. Yet cities with some of the highest living and housing expenses actually showed an excess birth rate. New York is one of the most expensive cities in the world to live. In London – where, property prices are rising 7.50 dollars (5 pounds sterling) every hour – women bear eight percent more babies than the national average. One explanation may be shifting attitudes. In their coldly pragmatic language, economists tend to see children as “inferior goods”: just as the demand for potatoes falls as incomes rise, so does the demand for children. But this seems to be changing among affluent city dwellers. It is possible that not only have children become “normal goods”, they may be on their way to being viewed as status symbols. After all, what better way to signal one has made it than to be able to afford to raise five kids in Manhattan or London? Or even six kids when it comes to Angelina Jolie and Brad Pitt. That’s what the experts call the “Brangelina effect”. Children tend to be status symbols; their parents are happy to show that they can afford many of them.

So, are cities the answer to the demographic aging of the developed world?

Of the cities surveyed, only Dallas and Birmingham have fertility rates of 2.1 children per women, the number considered necessary for one generation to replace itself without immigration. Five other cities have fertility levels just under the replacement rate. What this means is that the baby bounty of cities, while a demographic bonus, is not a solution to aging societies. This is particularly true for Europe where not one single country has a fertility rate at replacement levels. Countries need to find other ways to sustain their population, economy, public services and pension systems. Cities that provide a good work-life balance and flexible, stable working environments – particularly for working mothers – can be part of the solution. If this is achieved, then other adults may be encouraged towards parenthood and urban streets will not be as bereft of playing children as was once feared.

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